Not all office space is equal, which is why a class system exists to categorize the age, amenities, aesthetics and general infrastructure of buildings. These classes are used to determine the space’s price, though many experts argue that the classifications are subjective.
What Are The Different Types of Office Space?
When most people think about office space, they typically think of a single suite in a building with a reception area, a few individual rooms/offices, maybe a conference room and an open area or “bullpen”. If we zoom in a little further, we see there are actually a fairly wide variety of office space types that fit different kinds of companies at various stages of growth. Let’s examine them each.
Traditional Office Space
Think law firms, accounting offices, and any other traditional business type seeking a more corporate look and feel. Typically has a reception area at the entrance, several individual offices, and a conference area along with a wet pantry and an open area for cubicles. The vast majority of these kinds of spaces typically require a multi-year lease (NY average is 3-5+ years).
Has become increasingly popular over the past 2-3 years, this is more open space with less individual rooms and more area for workstations. Less square footage is allocated per person, but there is typically more room for lounge/meeting areas and it’s all in the name of an open work environment that encourages and fosters collaboration.
Wood or polished concrete flooring and raised ceilings without any tedious ceiling tiles and monotonous light fixtures are key aspects of creative space. While most companies seeking this brand of office are tech firms, creative agencies (architects, graphic designers, photographers) and the like, more and more traditional business types have been transitioning over to this form of space.
A fully serviced office solution whereby an individual or very small organization (usually up to 4 people) rent a single office as part of what is commonly a full floor of space rented by one organization that then licenses out individual spaces to other companies. On top of typically coming fully furnished and pre-wired and connected to phone and internet services, the perks of an executive suite include access to a common conference room and break room, a reception area with receptionist, and most importantly - very flexible lease terms.
Most executive office suites will offer month to month, 3 month, 6 month, 9 month, and 1-year lease agreements. Elasticity in lease length is a huge plus for start-up companies, individuals that are between jobs in need of a temporary office, and any other organization that isn’t sure about growth rate.
Think executive suite space but with more of an open and creative look and feel to them. Co-working offers very flexible terms and the convenience of a reception area and shared conference rooms, break areas, etc. but is almost always in a wide open space. Many Co-working spaces do offer individual rooms for larger outfits, but they are primarily geared towards smaller/start-up companies looking for desk space. Terms vary, but many offer agreement lengths ranging from desk space for a day up to 1-year terms.
In addition to the flexible lease terms and open/collaborative look and feel, Co-working offers a unique social aspect that no other office space solution can provide. Co-working facilities often host meet-ups, events, and conceptually encourage social interaction between its tenants in the form of organized lunches and happy hours. The drawbacks include limited growth opportunity and privacy. It’s often somewhat loud and reserving a conference or meeting area can be difficult.
Class A Office
The highest-quality space on the market is considered Class A. These spaces are generally newly constructed, and have been outfitted with top-of-the-line fixtures, amenities, and systems. Class A buildings are usually aesthetically pleasing, as they reside in high-visibility locations, such as a metropolitan’s central business district. These spaces are normally maintained by reputable property managed companies that keep them looking impeccable. Height is another common characteristic of Class A buildings.
Many high-rises are considered Class A buildings and the offices inside these structures tend to have higher ceilings as well. A large central lobby is also typical in such superior spaces.
Class rates are typically higher than the city’s average rent, and tenant concessions are rare. This is because premier Class A space is competitively sought-after by some of the most well-known and largest firms in the country. These spaces are popular among banking, real estate, and law firms.
Class B Office
These buildings don’t usually contain the same high-quality fixtures, architecture, and lobbies as Class Class B. Average office space is categorized as A space, but are generally nice buildings with fully functional facilities.
Their locations, building systems and property managers are described as average to above average. Therefore, Class B space tends to command average market rent. The majority of Class B buildings are less than four stories tall and are often found in the suburbs or on the outskirts of large financial districts.
Another consideration that separates Class A and B buildings is age.
Many Class B buildings are a little older and may be experiencing minimal deterioration or breakdown. Some buildings start out with a Class A grade but are downgraded after 10 years or so...once signs of wear and tear become apparent.
Class C Office
These are the poorest quality structures on the market. They tend to be located in the least desirable office districts and are usually in need of major repairs and renovations. This is likely due to the building’s age, as Class C properties are more than 20 years old.
Some Class C properties remain occupied, commanding lower rental rates and attracting tenants with smaller operations who cannot afford nicer spaces or who do not need to reside in a central hub. Other Class C buildings are sold as rehabilitation or redevelopment opportunities. With some improvements and repairs, a Class C space can be upgraded to Class B, though it is unlikely to achieve Class A status, especially considering its location and aged infrastructure.